Dubai’s CSP price cap seen driving technology’s competitiveness

16th March 2017 By: Terence Creamer - Creamer Media Editor

The Bookpoort CSP plantPhoto by: Duane Daws

A leading developer of concentrated solar power (CSP) projects in Africa and the Middle East believes the price cap proposed by the Dubai Electricity and Water Authority (DEWA) for an upcoming CSP project could add significant impetus to improving the technology’s cost competitiveness, which may also have spin-offs for South Africa.

In the January, DEWA released a request for proposals (RfP) for a 200 MW CSP plant, to be built within the Mohammad Bin Rashid Al Maktoum Solar Park by April 2021. However, the utility also indicated that the preferred bidder should deliver electricity at below $0.08/kWh.

ACWA Power renewable-energy COO Christoph Ehlers reports that the cap is significantly lower than CSP tariffs hitherto achieved, including in South Africa, where the company’s 50 MW Bokpoort CSP plant recently marked its first full year of commercial operations. Nevertheless, ACWA Power plans to bid.

The Bokpoort parabolic trough plant in the Northern Cape was procured during the early phases of the Renewable Energy Independent Power Producer Procurement Programme and is, therefore, contracted to supply electricity to Eskom at the relatively high price of R2.57/kWh.

Subsequent CSP projects, both parabolic trough and tower, have been procured at tariffs well below R2/kWh, but are still considered expensive, especially when compared with solar photovoltaic (PV) and onshore wind. However, unlike solar PV plants, CSP power stations are able operate when the sun stops shining, as they can incorporate molten-salt storage.

The cost of another ACWA-linked CSP project, Redstone, has been the subject of some debate since the middle of 2016, when Eskom objected to signing the power purchase agreement (PPA) on the basis of affordability concerns. Eskom was initially poised to sign the PPA in late July, but then claimed that the cost of Redstone, which is being developed together with SolarReserve, had increased from R50-billion to over R60-billion for the PPA period.

Ehlers refuses to comment on the future of the project, saying only that he is optimistic that resolution will be found in the coming weeks.

He also remains bullish on prospects for CSP in South Africa, despite the technology’s exclusion from the draft Integrated Resource Plan (IRP) Base Case published late last year.

There have been several interactions since the publication of the document to highlight not only the increasing cost competitiveness of the technology – particularly arising in countries such as Morocco and the United Arab Emirates – but also its jobs and industrialisation potential.

The Department of Energy has extended the period for public comment on the draft IRP Base Case until March 31 and expects to finalise the new IRP later this year.

Ehlers acknowledges costs will have to fall to ensure that CSP has a future within the global and the South African electricity mix. However, he believes there is still much potential for the costs to decline markedly, arguing that CSP is possibly two decades behind wind and ten years behind solar PV in its evolution.

“The moment somebody reaches this breakthrough of $0.08/kWh, then CSP will be on the same level as coal. It will also offer South Africa a very viable alternative to coal in a technology that can create thousands of jobs, given that the South African industrial base is already capable of producing many of the components used in a CSP plant.”